Have you ever asked what is Legal Departments and how they help corporates?

BY Nassr Albarakati Law Firm · 01 February 2024

Table of content

Introduction

According to a 2020 Harvard Business Review statistic, American companies incur losses exceeding $20 million due to settlements and legal issues arising from the absence of an internal legal department and the lack of external legal counsel for contract management and internal business regulation. Hence, the presence of a legal management team in any company is paramount. It plays a vital role in decision-making processes by executives and offers valuable consultation to various departments. Therefore, a successful legal department significantly enhances the protection of the company's and its partners' interests, proving essential for corporate stability.


The question arises about the types and roles of legal departments in commercial companies.

Types of Legal Departments in Companies

The choice of a legal department type for a commercial entity is based on a thorough analysis of the company's legal situation and business volume. At Nasr Al-Barakati and Partners Law Firm, we initiate any legal management by assessing the commercial entity's case and setting appropriate criteria for managing legal affairs. When utilizing any legal department, it's crucial to understand the primary types of these legal entities:

·      Internal Legal Affairs Department: This department comprises experienced legal professionals working under the company's management and supervision.

·      Contracting with Specialized Law Firms: This involves engaging reputable law firms experienced in legal management.

Tasks and Functions of Legal Departments

Legal departments undertake numerous responsibilities, including organizing all legal matters within the company, providing legal advice to the board of directors, drafting company contracts, conducting necessary legal procedures like trademark registration and patenting, formulating internal regulations in compliance with laws, handling employee complaints, and resolving them efficiently.

 

Legal departments also ensure the application of operational systems and regulations, oversee legal disputes involving the company, and pursue the company's rights against third parties.

 

A prominent instance highlighting the need for a legal department is the regulatory requirement for a lawyer to represent the company in most commercial litigations before commercial courts or in appeals against their judgments, as stipulated in Article 51 of the Commercial Courts Law. This includes disputes arising from the traders' primary or ancillary commercial activities, partnership disputes in a Mudaraba company, and claims and violations under the Companies Law, Bankruptcy Law, Intellectual Property Laws, and other commercial regulations.

 

Thus, the absence of legal representation in commercial disputes can lead to the dismissal of the case, preventing the company from claiming its rights against others.

 

In conclusion, the significance of legal departments in companies cannot be overstated, as they save the company time, effort, and money that could be lost due to a lack of legal framework for its operations. Their presence is not a luxury but a fundamental part of the company's investments that the employer should diligently maintain, just like any other core pillar of their business venture.

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